The underpricing of private targets

Post IPO Withdrawal Outcomes

“…were involved in a merger or acquisition. As noted previously, this is a much higher rate of post withdrawal merger/acquisition activity than reported by Lian and Wang (2012) or Cooney, Moeller and Stegemoller (2009). Of the 250 issuers involved in merger/acquisition activity, 68 complete the merger/acquisition before the withdrawal of the IPO (as noted by Lian and Wang these issuers are likely to have used the IPO filing to improve bargaining in an ongoing merger/acquisition negotiation).…”

“…Approximately 36% are able to raise equity privately post withdrawal and 42% either merge or are acquired. Interestingly, the prevalence of post withdrawal mergers and acquisitions is much greater than found by Lian and Wang (2012) and Cooney, Moeller and Stegemoller (2009), even with significant sample period overlap, highlighting the challenges involved in data collection. Approximately 30% of issuers return to private status with no postwithdrawal capital market (capital raising or merger and acquisition) activity and one third of those have stopped operations (without formal bankruptcy filings).…”

“…Dunbar and Foerster (2008) find that approximately 10% of firms withdrawing an IPO are able to later return for a successful IPO. Lian and Wang (2012) find that approximately 9% of firms withdrawing an IPO are acquired while Cooney, Moeller and Stegemoller (2009) This study attempts to add to our understanding of the consequences of the choice to withdraw an IPO by more thoroughly tracking capital market and corporate outcomes for issuers. Specifically we track all issuers that withdraw an IPO between 1999 and 2004 and look for post-withdrawal capital market events including IPO refilings (as in Dunbar and Foerster, 2008), mergers or acquisitions (as in Lian andWang, 2012, andCooney, Moeller andStegemoller, 2009), and private placements.…”

Target Financial Independence and Takeover Pricing

“…(2004) use a sample period and definition of Tobin's Q similar to ours and report average and median acquirer market-to-book of 2.22 and 1.45, respectively. Because prior studies (e.g., Cooney, Moeller, and Stegemoller 2009;Officer, Poulsen, and Stegemoller 2009;Bauguess et al 2009;McNichols and Stubben 2015) show that acquirer (target) announcement returns are negatively (positively) affected by target valuation uncertainty, we control for Industry M/B stdev. Industry M/B stdev is the standard deviation of market-to-book ratios of firms in the target industry with assets between half and twice the target size (Cooney, Moeller, and Stegemoller 2009).…”

Venture Capital Valuation, Partial Adjustment, and Underpricing: Behavioral Bias or Information Production?

“…This phenomenon describes a belief formation process that begins at a specific initial value, which may be salient or entirely irrelevant, and then adjusts toward a final value, based on other considerations and information. The typical bias observed is that the final value is based on a biased adjustment from the potentially arbitrary initial value, hence its term "anchor" (e.g., Cooney, Moeller and Stegemoller, 2009;Moeller, 2010;Dougal, Engelberg, Parsons and Van Wesep, 2011;Baker, Pan and Wurgler, 2012).…”